How to Retire in the Bahamas: The Complete Guide (2020)

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We work our whole lives in preparation for our retirement, so let’s make sure your hard work pays off. If you’ve always dreamt of taking a trip to the tropics like the Bahamas but never had the time, why not plan to live there after retirement?

To retire in the Bahamas, you’ll need to account for the various expenses associated with living there as you financially prepare for retirement by saving and investing your money. When you’re ready to move, you’ll also need to apply for a permit, find a place to live, and budget for your lifestyle.

Planning for retirement can be an overwhelming and daunting task for many people, especially if you’d like to move elsewhere when you stop working. Keep reading to learn more about how to financially prepare for your retirement, calculate the cost of living in the Bahamas, choose a place to live, and find new hobbies to pick up in your spare time.

Financially Prepare for Your Retirement

When it comes to retirement, money is typically the most pressing concern that people have. Don’t fret. Here are some ways to save up some cash as you work towards retirement. You might already be doing some of them!

Note: this is not financial advice. You can read our disclaimer here.

Social Security

Retirement planning starts a lot earlier on than you may think. For most people, so long as you’re making an income, you’re contributing to Social Security. This means your retirement savings have already started—whether you knew it or not.

Social Security is a government tax program that invests money into Old Age Survivors Insurance (OASI) and the Disability Insurance (DI) Trust Funds. On each paycheck, you contribute 6.2%, and your employer matches that with the same amount.

To get the most out of your Social Security benefits, avoid accessing them until you’ve hit age 70 if possible. Once you reach this magic number, you’ll be receiving the maximum amount of money each month.

Another way to get the most bang for your buck when you dip into your Social Security funds is to make sure you work for 35 years or more. The benefits you access are dependent on the 35 years in which you generate the most income. So, it’s important to work at least that long to maximize the amount of money you’re given in retirement.

Note that in retirement, there is an earnings limit. If you hit this limit by continuing to generate income, your Social Security benefits will be penalized based on each dollar you earn above this threshold. For instance, in 2019, the earnings limit at the age of full retirement was $46,920. For every $3 earned above this limit, you’d be penalized $1. That’s a whopping 33% of your earnings!

Add to a 401(k)

Contributing to a 401(k) is a great way to save money for retirement. This is an investment plan sponsored by your employer’s company that you can regularly add to. The nice thing about these is that they advantage you in terms of taxes.

There are two different types of 401(k)s: one that you contribute to pre-tax (which lowers your income tax) and one that you contribute to post-tax but offers a tax-free withdrawal.

Within financial limits, both you and your employer can make contributions to your 401(k).

Employers use different formulas to determine the rate at which they will match your contribution. These can come at varying monetary matches and will depend on how much you personally streamline into your 401(k), but it’s generally recommended that you contribute enough to get the maximum employer match.

Meet With a Financial Advisor

Sitting down with a financial advisor is a great way to learn more about savings from an expert. This experience is fully tailored to you. Financial advisors can help you make a financial plan specific to your current income and future retirement goals.

Online tools like Paladin Research & Registry or The National Association of Personal Financial Advisors (NAPFA) can be helpful in finding an advisor near you that is well-suited to your personal needs.

These meetings do come with a cost, though. Different financial professionals charge differently; some have hourly rates, while others are paid based on commission.

Money Under 30 offers an in-depth look at the various options of advisors and how they are compensated. Depending on where you’re at financially, investing in these services may unfortunately not be realistic for you. A mere hour-long meeting with an advisor may cost you a few hundreds of dollars.

Regularly Add Money to Your Savings

Knowing how much money you should set aside with each paycheck can seem daunting. A common way to split up your income is known as the 50/30/20 rule: 50% of your pay should go towards essential living costs, 30% for non-essential spending, and 20% for savings. We can thank Senator Elizabeth Warren for this method.

This 50/30/20 calculator from MoneyFit can even do the math for you, so you don’t have to think twice. Simply enter your income, and it will tell you how much should be put away in savings.

This is a great way to begin regularly tracking and making additions to your savings account. However, according to Money Under 30, this ratio might not be the greatest in the long-run as 20% might be too little to retire on. The rule also doesn’t account for periods when it may not be feasible to devote that much of your income to savings.

Instead, use this as a starting point and see if you can increase the percentage you dedicate to savings. Try 25% or even 30%. Ultimately, the more you can save for later, the better.

Invest in Stocks and Bonds

One of the great things about the stock market is that they account for inflation, unlike other types of savings. A few hundred dollars you purchase in stocks can grow significantly by the time you’re ready to pull them out as you approach retirement.

While their worth does, of course, rise and fall at the hands of the stock market, they do historically get you a higher payout than bonds. If you’re relatively young and far from retirement, investing in stocks can be a great option.

Bonds, however, are more reliable investments. Though they may not grow as much, they are lower-risk options that operate on fixed rates and amounts of time. If you are approaching retirement and not too keen on the fluctuation of the stock market, try investing in a bond.

Calculate How Much It Will Cost You to Live in the Bahamas

From a monetary perspective, there are several factors to consider when calculating how much it will cost you to live somewhere else—especially if that place is in another country. From taxes to visas to costs of living, here are some variables that will determine your expenses:

Exchange Rate

When converting some currencies, you can lose a lot of money in the exchange rate alone. Luckily, the exchange rate from the US dollar to the Bahamian dollar is one to one, so you are not losing or gaining by converting your money over.

If your savings are in USD, you don’t need to do any mental conversions to figure out how much something truly costs. This is also a plus. In countries where you lose money in currency exchange, but the prices you see are lower, you can easily forget that things may actually be more expensive and wind up overspending. In the Bahamas, this is not an issue.

In fact, it may not even be necessary to convert your money at all since most places in the Bahamas do accept US dollars.

Taxes

One of the best reasons to retire in the Bahamas is that many taxes will soon become just a distant memory. Bahamians do not get charged taxes on income, capital gains, gifts, or inheritance. This means, when you earn money through any of these systems, it’s all yours.

The Bahamas does not have a wealth tax in place either, so if you’re quite well off financially, you don’t have to worry about your hard-earned money being distributed elsewhere. Plus, there is also no corporate or business tax, so this is a great place for commerce.

Still, as an American citizen, you will have to file your taxes in the United States annually. This includes any foreign bank accounts like the one you will likely open up in the Bahamas while you’re living there.

While it is known to be a tax haven, there still are some that you’ll have to pay. Real estate tax falls between 0 and 2%, sales tax is 12%, customs duties are, on average, between 30 to 35%, and excise duty is charged on local alcoholic beverages.

Cost of Living

Living in the Bahamas is much more expensive than living in America. In fact, the Bahamas is the fourth most expensive country to live in, in the world, according to Expatistan.

Here is how the cost of living in the Bahamas compares to that of the United States:

	Bahamas	United States of America
Rent [furnished 900 ft2 (84 m2) in expensive area]	B$2,878	$2,248 USD
Food (per average lunch)	B$20	$15 USD
Clothing (per pair of jeans)	B$100	$45 USD
Transportation (per monthly ticket)	B$56	$78 USD
Personal Care (per tube of toothpaste)	B$3.46	$1.84 USD
Entertainment (per cocktail)	B$20	$12 USD

You can see that the cost of living in the Bahamas is definitely higher almost all across the board (except for public transportation) than in the United States.

On top of rent, monthly utilities for the same sized living space cost B$355 in the Bahamas versus USD 175 in the United States. Additional expenses, including a month’s worth of internet, a 40 inch (101.6 cm) television, and a 100 fluid ounce (2.96 liters) bottle of laundry detergent, would cost B$776 in the Bahamas versus USD 311 in the United States.

Not including the television, this would be an annual cost of B$39,516 per year for housing in the Bahamas, compared to USD 29,772 in the United States.

Visa

There are a few different options for visas in the Bahamas, which you will learn about in more depth shortly. Depending on the one you decide is best for you, they’ll come at different costs. Permits for living in the Bahamas range from a one time B$200 payment to an annual B$500 fee.

Insurance

You never know what could happen to you at any given time, so being covered by insurance is always a good idea. Look for an insurance company that specifically works with expats to make sure you’ll get the coverage that you need.

Companies like Expat Financial and Aetna offer international plans perfect for long-term worldwide travel. To ensure you have all of the coverage you need, talk to an insurance expert before jetting off for your retirement.

Leisure

Once you’re in retirement, you’ve got all the time in the world on your hands. Maybe you’ll partake in some adventures on your bucket list, like dining at a certain luxury restaurant or traveling to some new places. You might even finally have time to pick up that hobby you’ve always been interested in but just never had the time.

Whatever it is, remember to account for the retirement lifestyle you want to live when calculating your budget on a fixed income. Some people assume that they won’t spend as much money in retirement, but be sure to think through your ideal day-to-day life before making this assumption.

Determine Which Permit Is Best for You

There are a few different permits issued by the Bahamas Immigration Department. Each one has its own set of eligibility requirements, restrictions, and costs associated with them.

Permit to Reside

One of the permits you may be eligible for in your Bahamian retirement is the Permit to Reside, or the Annual Permit. The card is valid for one year but can continue being applied annually. This permit is great for those who would like to live in the Bahamas but not for work. So, if you’re planning on starting a side hustle here in your retirement, this is not the one for you.

The Permit to Reside will cost you a B$200 non-refundable processing fee, plus B$10 worth of Bahamian postage and the additional fees of any required documents you’ll need to provide. Some documents that will be needed from you include character references, a passport, and medical and police certificates.

Dependents that are tagging along must also apply for their own Annual Permits. Their required paperwork includes proof that they are enrolled in a local school or being homeschooled and their parents’ birth certificates.

Eligibility is granted to non-Bahamians who are dependents of those legally residing in the Bahamas or students attending school or post-secondary education.

Permanent Residence

If you plan on buying a property in the Bahamas, you can apply for a Permanent Residence. And, if the said property is worth over B$750,000, you’ll definitely catch the immigration department’s eye, so they’ll speed up the process.

Others who are eligible for this permit include teachers, nurses, police, and prison officers employed by government services for over ten years, as well as ministers and medical professionals who have been employed over 20 years.

This permit, unlike the annual one, is issued for life. It also allows the individual to reside and work in the Bahamas.

Like a Permit to Reside, this application process will cost you a B$200 non-refundable fee, B$10 worth of Bahamian postage, and the other associated expenses of obtaining the required documents.

Annual Homeowner’s Resident Card

If you’d like a less involved visa, the Annual Homeowner’s Resident Card might be the one for you. So long as you own a property within the islands, you should be eligible for this permit. There are fewer requirements necessary for the Annual Homeowner’s Resident Card than the other options, and it’s great for travel in, out of, and around the Bahamas.

In order to obtain the card, a B$100 fee is required, plus the B$500 cost to be issued a card itself once you are approved. As the name suggests, the Annual Homeowner Resident Card is good for one year, so it must be renewed annually.

Choose an Island to Reside On

The Bahamas is a country made up of 700 different islands. To say you have lots of choice in terms of where to live would be a significant understatement. Instead of just taking a guess, we’ve crafted a list of the best islands to turn into your new home.

Grand Bahama

Grand Bahama is one of the most popular islands, partially because of its accessibility from the United States. This island is just a mere 52 miles away from Florida. Because of this, it holds an International airport that’s often busy with American tourists.

This island is also the destination of the towns of Freeport and Lucaya. Freeport is an area known for its luxurious homes, restaurants, and resort-style amenities, while Lucaya is a fantastic spot to take in the local culture. Both will bring you the joy of tranquil white-sand beaches and all-around natural scenery.

Grand Bahama will provide you with the most American feeling experience without actually being back in the states. You’re never far from a quick trip back to the mainland of America to see your friends and loved ones.

Nassau

This one island homes a significant chunk of the country’s total population: a whopping 70% of it, in fact. Being the capital city of the Bahamas, Nassau is a hotspot for industry and commerce. As you have likely guessed, it’s also the busiest of all the Bahamian islands.

You can expect to see lots of cruise ships docking on this island as it’s a great spot to get a taste of the country. In this town, you’ll find romantic resort destinations, pristine blue waters, and a plethora of vibrant culture.

Living on this island, you’re bound to never have a dull moment. You’ll meet new locals and travelers every day here, while also gaining the convenience of residing in a populated area, but only being a short journey from the beach.

Eleuthera

Locals have coined the term “the Out Islands” for all Bahamian destinations aside from Grand Bahama and New Providence. As one of the Out Islands, you’ll find Eleuthera quieter and more serene than some other Bahamian islands.

Though you won’t feel like it, Eleuthera still has a strong tourist presence. However, the energy of this island is much more laid-back. This island is known for its stunning waters and beaches, as well as its friendly locals—one of whom you’ll quickly become.

Despite its quieter presence, life on Eleuthera does not mean you’ll have to give up power or plumbing. The nature of the island, though, is a bit more slow-paced than Grand Bahama or Nassau. For those who love to connect with nature and live within a small, neighborly community, this is the island for you.

Acquire Property or a Place to Live

Once you choose an island to live on in the Bahamas, you’ll, of course, also need to buy a house or find somewhere to rent.

Permits for Buying

Non-Bahamians must obtain permits to purchase the following: five or more acres (0.02 km2) of undeveloped land, property, or land intended to be used for a private residence, freehold, and leasehold transactions.

Legal Fees

When purchasing real estate, buyers must contribute to paying half of the stamp duty, which is a specific tax applicable to residential properties over a certain price. In the Bahamas, buyers must pay half of it.

Depending on the property’s price, stamp duty charges between 4% and 12% of the total cost. The percentage the buyer must pay increases with the value of the property.

Real Estate Tax

While the Bahamas is known as a tax haven, one that you aren’t exempt from is the real estate tax. However, if your property is worth less than B$250,000, you won’t be charged this tax. For properties between B$250,000 and B$500,000, you’ll be taxed at a rate of 0.75%. Finally, those between B$500,000 and B$5 million will be charged 1% in tax.

Residencies

It’s not cheap to rent or buy in the Bahamas, but if you’ve got the money to spend, February Point has some of the most luxurious living spaces around. With your choice of overwater penthouses or ocean-side residencies, you’ll be in awe with anything you pick.

Realtor websites such as Bahamas Realty can provide some assistance as well. It’s easy to use this tool to find available properties in your desired community within a given price range.

Pick Up Hobbies

When you’re living in the tropics year-round, there are some new things to experience that you just couldn’t when you’re living in a cooler climate. Now that you’ve worked so hard to get here, you should make the most out of it!

Water activities: With so many exciting options for staying active, you may just find yourself in better shape than you expected during your retirement! The Bahamas provide unique water-based activities like kayaking, surfing, swimming, diving, snorkeling, and windsurfing. The pristine waters are so inviting; it’d be a shame not to take advantage of them.
Land activities: For those who’d rather keep their feet on solid ground, there is still a range of fun ways to get your exercise in. The Bahamas provides excellent scenery for cycling, golfing, bowling, walking, or running. Of course, these islands are also home to some upscale shopping, which you’ll surely experience sooner than later.
Travel: Just because you’ve chosen which Bahamian island is best suited to you in your retirement doesn’t mean you can’t explore the others. Of the 700 islands that make up the country, only 30 are inhabited. That narrows down the list, so why not try to visit each one?
Learn something new: There is always something new to be learned in a new country surrounded by new sights and diverse cultures. Explore the history of the islands, find out about protected species, learn to cook the local cuisine, or read a book on identifying native plants and animals. There’s always new and exciting information that surrounds you when you enter a new environment. Soak it in!
Learn a new language: Though English is the Bahamas’ official language, it’s a fantastic destination to pick another one up. You’ll come across lots of native Creole speakers around the islands, and what better way is there to learn a new language than to be practicing it regularly?

Final Thoughts

Preparing for retirement can be a stressful process, but the more you learn about what you need to do to achieve your goals, the easier it will be. To retire in the Bahamas, you’ll need to be regularly contributing to different savings, which may include investments like bonds and stocks, figure out how much your Bahamian lifestyle will cost you, choose an island to reside on and property to live in, and pick up some hobbies to fill your time.

Once you rest on the white sandy beaches and swim in the vibrant turquoise water, all your hard work will be worth it.

How to Retire in the Bahamas: The Complete Guide